Indonesian unions protest against food inflation

Lengthy queues for cooking oil have become common outside Jakarta. In the Lebak Regency, 100 kilometres southwest of the capital, a local resident told media on Monday the queue was about a kilometre long.

The newly formed Labor Party that represents trade unions said the current price of 23,900 Indonesian rupiah ($2.25) per litre of cooking oil – the government-set price is 15,500 rupiah – is too high for agricultural workers, street vendors and the urban poor. “Not only is it expensive, but it is also scarce – and people have to queue like beggars,” Labor Party president Said Iqbal told the protest.

Call to subsidise soybeans

The Indonesian Tofu and Tempeh Producers Co-operative has also called on the government to subsidise soybean imports. The price per tonne has increased from US$345 two years ago to $US617.

While Indonesia imports 90 per cent of its soybeans, soaring prices for other commodities including coal have been a great boon for its trade balance in recent months. The difficulty lies in keeping fuel and food staples affordable at home.

The war in Europe will increase inflationary pressures, given Ukraine has been a regular source of the wheat used by Indonesia’s flour mills, as well as sunflower oil – a shortage of which is now being factored into future prices for palm oil.

Last week Indonesia’s Ministry of Trade confirmed it was in discussions with wheat importers to diversify supply. Australian wheat is likely to help fill the gap. About a quarter of Australia’s last wheat harvest is yet to be exported, suggesting some supply is available.

However, the cost difference will be considerable. Indonesian flour mills sourced more from Black Sea suppliers in some recent years because their product costs less than Australian-grown wheat. Now it’s a seller’s market, and global wheat prices have gone up almost 30 per cent in the past two months.

Agus Pambagio, a Jakarta-based policy analyst and a former deputy chairman of the Indonesian Consumers Foundation, said commodity trade is always more volatile in the wake of global upheavals. He said Indonesia’s policymakers had been caught out by a lack of real-time data. Panic buying has also aggravated the situation.

“Policy is always lagging because of the data problem. With global prices so high, naturally our palm oil producers want to export as much as they can, and a lack of monitoring encourages many to try and bypass limits,” he said.